As China bullies Lithuania, EU steps back but Taiwan steps in

Taiwan's government announced Wednesday that it would create a $200 million fund to invest in Lithuania's economy, boost bilateral trade, and send an expert team to help the tiny Baltic nation stand up its own semiconductor industry.

Why it matters: Beijing has launched a bullying campaign against Lithuania in response to its decision to allow Taiwan to open an unofficial embassy using its own name, rather than "Chinese Taipei."

• Viewing the move as a violation of the "One China" policy, Beijing has recalled its ambassador to Lithuania, downgraded diplomatic relations with Vilnius, and barred all imports of Lithuanian goods.
• Reports have now emerged that Beijing is pressuring European companies to stop using Lithuanian products in their supply chain — an unprecedented intervention that may violate international trade rules.
• The Taiwanese government also purchased 20,000 bottles of Lithuanian rum that had been destined for China before the boycott, and shared suggestions for rum cocktails with the public.

The big picture: Taiwan is stepping up for Lithuania where the European Union — so far — has been either unwilling or unable.

• The European Commission has paid lip service to Lithuania's "current trade irritants" with China, but seems powerless to take real action without buy-in from EU member states who are wary of further antagonizing Beijing.
• Noah Barkin reports in his Watching China in Europe newsletter that several member states are "deeply unhappy" with how Lithuania handled the Taiwan issue.
• Even Lithuania's own president expressed frustration this week with the naming of the Taiwanese office, claiming that his government did not consult him and that it was a "mistake."

Between the lines: Barkin reports that there's speculation in Germany that the U.S. pushed Lithuania to approve the use of the name Taiwan — though these rumors may be colored by Berlin's fears of being pulled into a U.S.-China cold war.

• The Biden administration, for its part, has been outspoken in its support for Lithuania, with Secretary of State Antony Blinken raising the issue in nearly every call with his European counterparts over the last few weeks.
• Standing next to Germany's new foreign minister Annalena Baerbock yesterday, Blinken said at a press conference that "this isn’t just about Lithuania, but about how every country in the world should be able to determine its own foreign policy free from this kind of coercion."